Activity remains stable despite end of stamp duty relief
UK house prices saw a slight rise in May, according to the latest Nationwide House Price Index, with annual growth at 3.5% – a marginal increase from 3.4% in April.
On a monthly basis, prices rose by 0.5%, bringing the average house price to £273,427 after seasonal adjustment.
“Official data confirmed that there was a significant jump in residential property transactions in March, with buyers bringing forward their purchases to avoid additional stamp duty costs,” said Robert Gardner (pictured left), chief economist at Nationwide Building Society. “Owner occupier house purchase completions were around twice as high as usual and the highest since June 2021 (which was also impacted by stamp duty changes).”
Despite the end of the stamp duty relief period, market momentum appears to be steady, Gardner noted. “Mortgage approvals data suggests that market activity appears to be holding up well,” he said. “Despite wider economic uncertainties in the global economy, underlying conditions for potential home buyers in the UK remain supportive.”
He cited strong household finances, low unemployment and rising real wages as factors supporting housing demand. “Borrowing costs are likely to moderate a little if bank rate is lowered further in the coming quarters as we, and most other analysts, expect,” he said.
“Since the end of the stamp duty holiday, we have seen stable transaction volumes reflecting the ongoing resilience of the housing market despite continued economic uncertainty,” added Amy Reynolds (pictured centre), head of sales at Antony Roberts.
“We’re seeing a flight to quality – buyers are more selective and price-sensitive but still transacting where values align with lifestyle. It’s also clear that while high mortgage rates have cooled the market, demand remains underpinned by low supply in many areas.”
According to Verona Frankish (pictured right), chief executive of Yopa, not only has the market benefited from a degree of post-stamp duty deadline stability, but the reduction in the base rate seen at the start of May has also helped to drive buyer activity.
“While the general expectation is that the base rate will be held this month, this is unlikely to deter the nation’s homebuyers, who remain keen to transact despite interest rates sitting higher than they may have become accustomed to in recent years,” Frankish said.
House price growth still stronger in rural areas
Nationwide also reported that house prices in rural areas have continued to rise more quickly than those in urban centres. “Our recent special report identified that average house price growth in predominantly rural locations has continued to outpace more urban areas,” Gardner said. Between the end of 2019 and the end of 2024, rural prices rose by 23%, compared to 18% for urban properties.
The Nationwide House Price Index also showed that while the COVID-19 pandemic initially drove the demand for countryside living, that trend has endured in price growth even as buying patterns have started to normalise.
According to the mutual lender’s survey of homeowners who moved in the past five years, most relocations occurred within the same type of area. “Our findings indicate that the majority (63%) of house moves were within the same type of area,” Gardner said. “Around 9% of moves were from towns/cities to rural areas... although this was partially offset by 7% who moved from rural to more urban areas.”
Demographic trends also showed a divide in preferences. There was a significant difference by age group, with younger people – those aged 25 to 34 – tending to move to more urban areas, and older age groups, particularly over 55s, favouring more rural areas.
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